Loan Limits Are Falling, But Does It Matter?

For the past three years, the federal government has guaranteed the vast majority of new home loans, working through Fannie Mae and Freddie Mac and the Federal Housing Administration.

Starting Saturday, the government will take a small but meaningful step back. It will modestly reduce the maximum loan size that federally backed entities can guarantee in certain high-cost housing markets. They’ll fall on a sliding scale depending on regional home prices and will top out at $625,500, down from the current $729,750.

Will this further cripple a fragile market? Or is this much ado about not much?